FriendFinder Networks' Previte: Mounting Debt Forced Chapter 11

BOCA RATON, Fla. — Penthouse Magazine and AdultFriendFinder.com owner FriendFinder Networks Inc. (FFN) has filed for Chapter 11 bankruptcy protection in Wilmington, Del., after reporting losses in seven consecutive years to 2012.

The company listed assets of less than $10 million and liabilities of as much as $500 million to $1 billion, according to court papers.

FFN CEO Anthony Previte, who took over the top post in July of 2012 after Marc Bell stepped down from his position, told XBIZ that the central reason for the company’s restructure was due to mounting compounded debt over time that had banks, credit card processors and creditors perceiving the company as a bad risk despite it having paid back nearly $150 million.

“It was tough to keep up with the accretion of debt. We hit a tough spot in September of 2012 because of it,” Previte said.

The company’s filing read, "Despite continuing member interest and high volume traffic, the debtors did not make certain payments to the holders of existing first lien notes and cash pay second lien notes which constituted a default under their respective indentures.”

FFN has reportedly not made a profit since at least 2006 and reported a second-quarter net loss of $10.3 million, or 32 cents a share, on Aug. 15. It had cash or equivalents of $38.6 million on Mar. 31 compared with outstanding principal debt of $544 million, according to the financial statement.

Although the company’s live cam and dating businesses are doing well, according to Previte, Penthouse magazine has been the company’s biggest drain. He said shrinking retail outlets and scarcity of printers has hurt the publication. And although there are no immediate plans to kill the magazine, its long-term fate is questionable because of these external factors.

“The magazine will always be in digital form and will continue to be a marketing vehicle for clubs and broadcasters,” Previte noted.

Penthouse video production however, will continue operating along with the release of new 3D movies. But Previte said the current climate in California regarding adult productions is challenging and may force long-term changes.

In the Aug. 15 statement, Previte said the company was working with advisers and lenders to refinance the long-term debt.

Previte told XBIZ that the Chapter 11 restructuring has cleared the company’s balance sheet of $300 million in debt, making it more appealing to creditors and affiliates worried about its fate.  “Unlike private adult companies, being public allows everyone — including our competitors — to look under the kimono and know exactly where we’re at,” he said.

There are no company layoffs, shut downs or executive changes expected during the restructuring, according to Previte. He added that the company is not actively seeking new financing, and has $40 million in available capital in the bank. “It’s business as usual,” he said.

PMGI Holdings Inc. and 38 other affiliates were also listed in the filing, but Previte explained that their inclusion was a mechanical move to allow the filing to go forward in the state of Delaware.

FriendFinder was delisted from the NASDAQ exchange on Aug. 7 and is trading on the OTCQB Marketplace where shares rose 1 cent yesterday to 33 cents.

View the FriendFinder Court Papers

Related:  

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Vendo Launches 'Pay by Bank' Service

Vendo has launched its new Pay by Bank checkout system.

MYLF Debuts New Series 'Mommy's Little Man'

MYLF has released the premiere episode of its newest series, "Mommy's Little Man," titled "Have Some Pussy While You Wait."

CrakRevenue Taps Maxime Bergeron as New CEO

CrakRevenue has appointed longtime staffer Maxime Bergeron as the company's new CEO.

Ricky Greenwood Directs 'Jane Doe' for Pure Taboo

Adult Time studio imprint Pure Taboo has released "Jane Doe," the new director showcase from Ricky Greenwood.

Clips4Sale Adds 'Spatial Video' Category

Clips4Sale (C4S) has debuted a “spatial video” category for the next generation of VR and AR devices.

On the Set: Adult Time Gets Extra Kinky for 'The Bottom Floor'

XBIZ Gay Directors of the Year Siouxsie Q and Michael Vegas — as part of their Adult Time “Director Showcase,” which empowers the studio’s top production maestros to go all-out with maximum artistic freedom — brought together a who’s who of kinky veterans with a diverse array of sexualities, gender identities and BDSM proclivities in a colorful and dark Los Angeles warehouse filled with Egyptian-style décor for "The Bottom Floor."

Brandi Love Stars in Latest Episode of 'Hotel Vixen'

Vixen Media Group (VMG) exclusive Brandi Love stars with Hollywood Cash and Jack Rippher in "Word of Mouth," the latest episode of "Hotel Vixen."

2024 XRCO Awards Winners Announced

Winners of the 2024 XRCO Awards were revealed last night during a ceremony at Boardner's nightclub in Hollywood hosted by Lauren Phillips and Caitlin Bell.

Cherie DeVille, DD Roasters Launch 'Morning MILF Magic' Coffee

Cherie DeVille has teamed up with Dani Daniels’ DD Roasters to launch a signature coffee blend, Morning MILF Magic.

Lemon Social Launches Educational Program, 'Metaverse' Feature

Premium fan platform Lemon Social has debuted an "Adult Content University" program and a "Lemon Social Metaverse" feature.

Show More